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2022 (7) TMI 657 - HC - Money LaunderingMoney Laundering - Criminal Conspiracy - proceeds of crime - scheduled offences or not - reasons to believe - Validity of the summons issued - validity of provisional attachment order - issuance of summons to explain the source of funds for the premia paid for the insurance policies - HELD THAT:- On perusal of Section 5 of PMLA, more particularly to sub-section (1) thereof, it is evident that the requirement of the law is that the competent attaching authority must have reason to believe, which must be recorded in writing, on the basis of material in his possession that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime, before he provisionally attaches such property for the limited period not exceeding 180 days. The sine qua non for exercising power under sub- section (1) of Section 5 is that the attaching authority must have reason to believe, which must be recorded in writing. Such reason to believe must be formed on the basis of material(s) in his possession that any person is in possession of proceeds of crime and that such proceeds of crime are likely to be concealed etc. Therefore the material in possession of the attaching authority must pertain to the above two aspects and on the basis of such materials he must form the reason to believe. In other words, the reason to believe must have a direct nexus or live link with the materials in possession pertaining to the above aspects. The expression reason to believe has been subjected to numerous judicial pronouncements. It is an expression of considerable import and finds place in a number of statutes - fiscal, penal etc. However, the expression reason to believe is not defined in the PMLA. But this expression is explained in Section 26 IPC as per which a person may be said to have reason to believe a thing, if he has sufficient cause to believe that thing but not otherwise. In the context of Customs Act, 1962, it confers jurisdiction upon the proper officer to seize goods liable to confiscation under sub-section (1) of Section 110 of the said Act. The offence of money laundering is not an independent or autonomous offence but is dependent on commission of a predicate offence. In other words an offence under the PMLA is not a standalone offence. It is relatable to commission or an offshoot of a scheduled offence. In so far the petitioner is concerned, as noticed above, there is no charge of scheduled offence against him - it is trite that for allegation of money laundering against one person, property belonging to another person cannot be attached. On a thorough consideration of all aspects of the matter, it can be held that respondents had clearly exceeded their jurisdiction in issuing the impugned summons and passing the impugned Provisional Attachment Order against the petitioner. Those are wholly unsustainable in law being without jurisdiction. Therefore question of relegating the petitioner to the adjudicating authority would not arise - when the impugned summons and the impugned Provisional Attachment Order are without jurisdiction, question of Section 24 of PMLA coming into play does not arise. Petition allowed.
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